Why Innovators Fail And How You Can Benefit?

Dileep Rao
, ContributorI focus on how entrepreneurs can grow without capital. I was a VC.Opinions expressed by Forbes Contributors are their own.

The belief that innovators, i.e. first movers, usually win is a highly cherished belief in American entrepreneurship and corporate innovation. And it is not true.

In a previous blog, I had suggested that entrepreneursshould imitate rather than innovate. Here, I want to offer some suggestions on when and how to imitate. One of the key issues from innovation is who gets the rewards from the innovation. As I noted earlier, you may not get the rewards of your innovation just because you happen to be the first one out with it. Someone may do it better or you may lose out for a number of reasons. History offers us many examples of first movers that later fizzled, including the Comet (passenger jet airplane) and Visicalc (the first PC spreadsheet). Bill Gates was not a first-mover. Neither were Steve Jobs or Mark Zuckerberg. This suggests that latecomers can often improve and win. So how can you be a successful imitator and improver?

First, pick the right industry and trend. There have been five major breakthrough technologies in America that created huge new global industries and billion-dollar entrepreneurs. They include:

Semiconductors in the 1960s

Personal computers in the 1970s which developed as a result of advances in semiconductors

Biotechnology industry in the 1970s with knowledge of gene splicing

Advances in telecommunications and fiber optics created new giants in those industries in the 1980s and early 1990s.

The granddaddy of them all, the Internet, was born at the nexus of most of the above technologies in the 1990s and helped connect the world. We are still seeing the seismic shock in nearly every industry.

So find the right industry and the right trend for you.

Second, select the proper timing. Passion is good, but the right timing is better. Many great entrepreneurs talk about the need for passion. What is often left unsaid is that they had impeccable timing in introducing the right product at the right time (see Steve Jobs).What I have seen is that successful innovation does not happen just because one hopes for it, or spends a fortune on it. In technology forecasting, you learn that major improvements in technology are not very predictable and forecasts of technology development are not very precise. Some improvements come from nowhere and create major changes elsewhere. As an example, the development of the semiconductor created all kinds of business opportunities and benefits in wide-ranging fields.

When a major breakthrough happens, move. Get going. My studies suggest that most major billion-dollar companies were started within a few months to approximately five years after a major technology breakthrough or after the first-mover’s introduction. It creates new opportunities, new businesses, new markets and new industries. That is the time to get started.

Third, pick the right strategy. Sometimes you need to find the right technology and acquire it, as Bill Gates did. Sometimes, you have to add the right design and make the product legitimate, as Jobs did with the iPod. Sometimes, you sell it differently or better, as
Dell did with PCs and Zuckerberg did with Facebook. Get close to your potential customers and understand how you can satisfy their needs better than your competitors.

Then comes the hard part, you execute to perfection.

But what do you do in between these major new innovations. You can wait for new breakthroughs or you can find niche markets. Breakthrough innovations are not predictable, and the benefits from them do not show up just because you want to get going. When asked what he was going to do after stemming the bleeding at Apple, Jobs is supposed to have said, “now we wait” … for a great opportunity. He found it in the iPod.

MY TAKE: Major breakthroughs, like the future, are not predictable. When they happen, they create significant opportunities for entrepreneurs who are willing to take the plunge. The key questions are whether you want to wait for the next breakthrough, will you be right for it, and what you do when you are waiting for the breakthrough technologies. If you do not want to wait, see where you can disturb the status quo, but that is a topic for a future blog.